In this paper, we explore paradoxes firms face when managing demand and supply activities and managers' experience of coping with and transcending these paradoxes. Following an exploratory research approach and based on the analysis of interviews with executive managers, documents from, and observations of 19 business-to-business (B2B) firms, we develop empirically grounded propositions. We first find and explain three major demand and supply paradoxes, namely collaboration-competition, concord-conflict, and integration-differentiation. We then expand on the handling mechanisms B2B firms employ to respond to these paradoxes. We find that B2B firms that understand, balance, and transcend demand and supply paradoxes achieve greater synergy between demand and supply activities and leverage both demand and supply approaches as overarching guiding principles for their strategy. Our study informs B2B marketing and marketing strategy by exploring the nature and role of paradoxes that shape the relationships between demand and supply activities. In doing so, it also offers an empirical account of the discrepancy between the theory and practice of demand and supply integration.
Firms' marketing and supply chain management (SCM) functions face the challenge of developing simultaneously efficient and effective demand and supply systems, as demand and supply activities take different routes to creating value for customers and firms. Despite the major advances in technology and managerial competence, the fragmented approaches to and tensions between firms' demand and supply activities continue to be a grave practical problem (Tate, Mollenkopf, Stank, & da Silva, 2015). This reality requires finding innovative and subtle ways of collaboration to transcend tensions and disconnects between demand and supply activities that may arise as a serious paradox (Hung, 2010). However, empirical research on how the relationship between demand and supply activities unfolds in the face of their paradoxical entwinement is scant and formulaic (Esper, Ellinger, Stank, Flint, & Moon, 2010; Jüttner, Christopher, & Godsell, 2010; Santos & D'Antone, 2014). The question of why the great divide between demand and supply persists in many firms (Drucker, 1973) remains unsolved, despite the logical appeal of and facilitative means for their integration. Understanding and managing the paradox of demand and supply is important as the world becomes more dynamic and complex. Creating relevant stakeholder value may distinctly rely on success in managing paradoxical strategies holistically when firms face economic volatility, customer demand instability, inventory write-offs, and supply chain fluctuations (Smith, Binns, & Tushman, 2010). Firms that can transcend these paradoxes achieve reliable and adaptive supply chains, real-time demand insights, and accelerated decision-making; which result in high growth and profitability. On the other hand, firms that are trapped in these paradoxes end up in a range of problems including material shortages, excessive and costly inventory, poor customer service, and cash flow difficulties. Thus, in this paper, we endeavor to understand different types of demand and supply paradoxes as paradoxes firms face at their demand-supply interface, and how firms engage in a delicate and constant struggle to transcend these paradoxes.